Sri Lanka is also hoping to keep the budget deficit at 4 percent of GDP, and an unemployment rate of less than 4 percent.
Sri Lanka has announced sweeping tax cuts announced in December, which will widen the deficit in 2020, but authorities expects revenues to growth with stronger growth.
However thee is concern whether there will be monetary accommodation with attempts to lower interest rates by injecting liquidity.
Sri Lanka will also keep a single digit interest rate and “maintain the exchange rate value of the rupee at a stable level”, the policy document said.
Sri Lanka’s central bank under the last administration went on an explicit depreciation strategy claiming that the rupee was over valued based on a REER index and also generated currency collapses through printing money to keep rates down, critics have said.
Sri Lanka’s central bank has depreciated the rupee from 4.70 to the US dollar to 182 to the US dollar since it was created with money printing power in 1951, in the worst performance among South Asian central bank.
The best monetary stability has been maintained by the Maldives Monetary Authority, which has depreciated to 15 to the US dollar and has the highest per capita income of the region and also free trade. (Colombo/Dec15/2019)